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SILAS v. SMITH

July 30, 1973

James SILAS, on behalf of himself and all others similarly situated
v.
Paul J. SMITH et al.



The opinion of the court was delivered by: LUONGO

Plaintiff, James Silas, has instituted this class action suit seeking to have declared unconstitutional § 413 of the Workmen's Compensation Act of Pennsylvania. Also under attack are certain administrative practices, allegedly fostered by § 413, *fn1" relating to the suspension and withholding of payments to injured employees without prior notice or hearing. It is charged that this section of the Act and the administrative practices violate plaintiff's Fourteenth Amendment right to due process and constitute violations of the Civil Rights Act of 1871, 42 U.S.C. § 1983. *fn2"

The Statutory Scheme

 The Pennsylvania Workmen's Compensation Act (Act), 77 P.S. § 1 et seq., provides a schedule of compensation for all employees who suffer an "injury . . . by an accident, in the course of . . . employment." 77 P.S. § 431. The Act provides for an arrangement between employer and employee, under which, in return for immunity from suit on common law fault grounds, the employer bears the cost, ultimately passed on to the consumer, of work-connected injuries regardless of fault, rather than have the cost of such injuries borne by public funds or by the employee himself. The Act further provides a system of insurance that assures the injured employee that his employer will be able to pay the statutory scheme of compensation and costs.

 Neither the employer nor the employee is bound to accept the provisions of the Workmen's Compensation Act, but acceptance by both is conclusively presumed unless, at the time an employment contract is entered into, an express statement is made by either party to the other that the provisions of the Act are not intended to apply and that a copy of such written statement, accompanied by proof of service upon the other party, is filed with the Department of Labor and Industry. 77 P.S. §§ 461, 462.

 The amount determined to be due either under an agreement by the parties or an award by the Board may be voluntarily modified or terminated by a supplemental agreement, approved by the Department of Labor and Industry, if the incapacity of an injured employee has increased, decreased or terminated. 77 P.S. § 732.

 Where the parties fail to agree to the terms of a Supplemental Agreement, the Workmen's Compensation Board, upon petition and hearing, may modify or terminate the existing agreement or award. 77 P.S. § 772. The party petitioning for such a modification or termination has the burden of proving that the disability which was the subject of the prior agreement or award has changed in a manner that justifies the relief sought by the petition. 77 P.S. § 772.

 Pursuant to § 413, the filing of the Petition to Terminate or Modify a Compensation Agreement or Award operates as a supersedeas which automatically suspends "the payment of compensation fixed in the agreement or by the award, in whole or to such extent as the facts alleged in the petition would, if proved, require." It is this provision, together with the practice of pre-petition termination, and the fact that an employer or insurance carrier seeking to modify or terminate the compensation payment need not notify the recipient before the filing of the petition, which form the basis of plaintiff's constitutional attack on the Pennsylvania Workmen's Compensation system.

 The Silas Suit

 James Silas sustained an injury while employed by defendant, Haverstick-Borthwick Company (H-B). On July 2, 1969, Silas and defendant, Pennsylvania Manufacturers' Association Insurance Company (PMAIC), H-B's Workmen's Compensation insurance carrier, entered into an "Agreement for Compensation for Disability or Permanent Injury." The Agreement, which was subsequently approved on November 7, 1969, by the Pennsylvania Department of Labor and Industry, provided that Silas was to be paid $60 per week, the maximum weekly payment for total disability allowable under the Pennsylvania Workmen's Compensation Act, plus medical and hospital expenses, and was "subject to modification or termination by Supplemental Agreement, Order of the Workmen's Compensation Board, or Final Receipt."

 Almost two years later, on June 28, 1971, Silas was examined by a doctor employed by PMAIC. The doctor concluded that Silas was then suffering from a permanent 50% partial disability, and that he could perform work of a sedentary nature, i.e. checker, sorter, or elevator operator. The doctor informed Silas of the conclusions he had reached as a result of the examination.

 Apparently as a result of that examination, on July 2, 1971, PMAIC submitted to Silas a "Supplemental Agreement for Compensation for Disability or Permanent Injury," reducing Silas' payments to $45 per week, the maximum amount provided under the Act for partial disability. Silas refused ...


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